Report: CT’s pension debt remains high despite residents’ personal wealth

Link: https://ctmirror.org/2022/08/02/report-ct-pension-debt-personal-income-high-eighth-worst-us/

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When Connecticut deposits roughly $4.1 billion into its pension funds this fall, it will mark the third consecutive year the state used its budget surplus to whittle down the massive pension debt accrued over more than seven decades.

But a recent analysis from The Pew Charitable Trusts provided a sobering reminder of just how far Connecticut still has to go — even considering its great wealth — to overcome decades of fiscal irresponsibility.

Connecticut had reported more than $41 billion in combined debt among its pensions for state employees and for teachers following the 2019 fiscal year. According to Pew, that represented 14.8% of Connecticut’s personal income at the time — more than double the national average of 6.8%.

Connecticut was one of just 10 states that topped the 10% mark, and ranked eighth-worst overall. New Jersey finished at the bottom with pension debt equal to 20.2% of statewide personal income.

Author(s): Keith Phaneuf

Publication Date: 2 Aug 2022

Publication Site: CT Mirror

A Third of States Lost Population in 2021

Link: https://www.pewtrusts.org/en/research-and-analysis/articles/2022/04/25/a-third-of-states-lost-population-in-2021

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Among the 17 states where population declined over the year, losses were greatest in New York (-1.58%), Illinois (-0.89%), Hawaii (-0.71%) and California (-0.66%). Losses in these states were driven by people moving away.

Four states experienced population declines because more people moved out than in, and more people died than were born: Massachusetts, Mississippi, Michigan, and New Mexico. The data does not separate deaths related to COVID-19 from others.

Aside from states with declines, population grew slower over the year than over the 2010-20 period in 19 states. Among them, Washington, Colorado, and Oregon experienced the biggest slowdown in growth compared with their decade-long pace.

After Idaho and Utah, population grew the fastest in Montana (1.66%), Arizona (1.37%), South Carolina (1.17%), Delaware (1.16%), and Texas (1.06%). Gains in each came mostly from new residents moving into the state.

Fourteen states grew more quickly than their 10-year paces. Idaho, Montana, Maine and New Hampshire sped up the most.

Nationwide, gains from international migration exceeded gains from the natural increase in 2021. It was the first time that newcomers from other countries contributed more to population growth than gains from births in a given year, according to the U.S. Census Bureau.

Author(s): Joanna Biernacka-Lievestro & Alexandre Fall

Publication Date: 12 May 2022

Publication Site: Pew

Personal Income Rose in 2021, But Growth Varied by State

Link: https://www.pewtrusts.org/en/research-and-analysis/articles/2022/05/13/personal-income-rose-in-2021-but-growth-varied-by-state

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Total personal income climbed in every state during the second year of the COVID-19 pandemic as the economy continued to recover, with Idaho and South Dakota experiencing the strongest gains. Americans’ earnings from work, which account for the bulk of personal income, recorded the sharpest annual increase in over two decades. Federal aid and other public assistance also added to states’ gains, surpassing 2020’s elevated levels.

Total personal income rose across states in 2021 as the economy largely followed an upward trajectory after severe losses early in the pandemic. Nationally, the sum of personal income from all sources was up 3.1% from 2020, after accounting for inflation.

Author(s): Mike Maciag, Joanna Biernacka-Lievestro & Joe Fleming

Publication Date: 13 May 2022

Publication Site: Pew Trust

If You’re a Frontline Worker, States Might Give You a Raise

Link:https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2022/01/27/if-youre-a-frontline-worker-states-might-give-you-a-raise

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Quit rates in fields such as education, health care and government are rising, as they are in other industries.

“You can see people moving out of teaching, and fewer teachers being hired,” said Brad Hershbein, senior economist and deputy director of research at the W.E. Upjohn Institute for Employment Research, a nonpartisan research organization based in Kalamazoo, Michigan. “And this also seems to be the case for health care workers—nurses in particular.” 

States employ about 5% fewer people in total than they did when the pandemic hit, according to the federal Bureau of Labor Statistics. Hospitals employ about 2% fewer people today than they did in March 2020.

….

Unexpectedly high revenues and federal COVID-19 relief funds give state leaders an opportunity to address the problem this year. States can use federal dollars from last year’s mammoth American Rescue Plan Act to offer bonuses to essential workers and grow the public sector workforce by up to 7.5%.

Author(s): Sophie Quinton

Publication Date: 27 Jan 2022

Publication Site: Pew Trusts

Suicide Risk Screenings Can Save Lives

Link: https://www.pewtrusts.org/en/research-and-analysis/articles/2022/01/25/suicide-risk-screenings-can-save-lives

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Suicide was the 12th leading cause of death in the United States in 2020.

The overall U.S. suicide rate grew 33% from 1999 to 2019, according to the Centers for Disease Control and Prevention. CDC reports even higher increases among certain racial and ethnic groups: American Indian and Alaska Native women (139%) and men (71%), Black women (65%), White women (68%) and men (40%), and Hispanic women (37%). Other people at greater risk of suicide include veterans, people who identify as LGBTQ, youth and young adults, and disaster survivors.

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According to a recent study, about half of people who died by suicide over the 10-year period examined had seen a health care professional at least once in the month before their death. Additional research suggests that, if they were screened for suicide risk by those providers, many might have received care and survived. Indeed, a 2017 study of eight emergency departments across seven states found 30% fewer suicide attempts among patients who were screened and received evidence-based care compared with patients who were not screened. Another study that looked at veterans affairs hospitals found that patients who were screened and then received clinical interventions were half as likely to experience suicidal behavior and more than twice as likely to attend mental health treatment compared with those who received usual care.

Author(s): Kristen Mizzi Angelone

Publication Date: 25 Jan 2022

Publication Site: Pew

The State Pension Funding Gap: Plans Have Stabilized in Wake of Pandemic

Link: https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2021/09/the-state-pension-funding-gap-plans-have-stabilized-in-wake-of-pandemic

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Most analysts attribute the strong market performance to historically low interest rates and an unprecedented $5 trillion in federal stimulus in response to the pandemic. In addition, the economy is now recovering at a rapid pace, with recent projections by the Congressional Budget Office, Moody’s, and the Federal Reserve forecasting a return to pre-pandemic levels of gross domestic product by calendar year 2022 or before.3

However, the path to recovery remains uncertain, and the long-term forecast for economic growth and pension investment returns is less rosy. The Congressional Budget Office expects average real economic growth of 1.6% between 2026 and 2031 and nominal growth of 3.7% over the same time frame—significantly lower than the historical average.4 As such, market experts now estimate equity returns, which are related to economic growth and current market value of stocks, to be 6.4% over the long term, compared with 6.7% before the pandemic.5 And with interest rates currently lower than pre-pandemic levels, they also project bonds to yield just 2% over the next decade before returning to the pre-pandemic expected yield of about 4%.6

Author(s): Greg Mennis, David Draine

Publication Date: 14 Sept 2021

Publication Site: Pew Trusts

Municipal Pension Funding Increased in Recent Years, but Challenges Remain

Link: https://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2021/05/municipal-pension-funding-increased-in-recent-years-but-challenges-remain

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The first metric is net amortization, which measures whether total contributions to a public retirement system are sufficient to reduce unfunded liabilities if all actuarial assumptions—primarily investment expectations— are met for that year. Plans with positive net amortization are expected to retire pension debt over time and therefore improve their funded status. 

Pew reviewed the three-year average for net amortization. This figure provides a more complete picture of contribution adequacy given the impact of volatile investment performance and demographic experience on plan assets. In total, the 33 cities in Pew’s analysis achieved positive amortization (104% of the benchmark) from 2015 to 2017. However, individually, more than half of the cities had negative amortization. Notably, Chicago and Dallas contributed less than 50% of the benchmark. In contrast, New Orleans contributed 174%, or $132 million, which was well over the city’s benchmark over the time period. For cities that are poorly funded, net amortization can indicate that they are on a path toward sustainably funding their pension plans. For example, New Orleans and Philadelphia have both increased their contributions significantly in recent years to achieve positive net amortization and decrease unfunded liabilities. On the other hand, better funded cities that fell short of the benchmark may face growing pension debt absent a policy change or adjustment.

Author(s): David Draine

Publication Date: 18 May 2021

Publication Site: Pew Charitable Trusts

Early Warning Systems Can Help States Identify Signs of Fiscal Distress

Link: https://www.pewtrusts.org/en/research-and-analysis/articles/2021/03/04/early-warning-systems-can-help-states-identify-signs-of-fiscal-distress?utm_campaign=2021-03-09+Squeeze+map&utm_medium=email&utm_source=Pew

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In a white paper for The Pew Charitable Trusts, Eric Scorsone and Natalie Pruett of the Michigan State University Extension’s Michigan Center for Local Government Finance & Policy assessed local government early warning systems through case studies in Colorado, Louisiana, Ohio, and Pennsylvania. Each of these states applies various financial ratios—an approach known as ratio analysis—and other indicators to identify signs of local fiscal distress. Ratio analysis uses fractions that capture financial or economic activity within a locality—such as total expenditures over total revenues—to measure solvency, the ability to pay debts and liabilities over the short or long term. Ultimately, the authors determined that there isn’t one optimal system and instead offer several recommendations for states to build or improve their early warning systems.

The authors present detailed descriptions of the four states’ systems and analyze trade-offs and implications of the indicators employed to measure different types of solvency. They offer a variety of recommendations for states to consider, including use of indicators for four types of solvency:

Author(s): Jeff Chapman

Publication Date: 4 March 2021

Publication Site: Pew Trusts

Stress Testing of Public Pensions Can Help States Navigate the COVID-19 Economy

Link: https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2021/03/stress-testing-of-public-pensions-can-help-states-navigate-the-covid-19-economy

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Overall, the typical pension fund is now expected to return approximately 6% annually over the next 20 years, compared with 6.4% pre-pandemic (Figure 4). This change in outlook is consistent with the reduction in the median long-term return found by a recent survey of pension investment consultants13 and aligns with revisions for public pension return expectations published by S&P Global.14

Author(s): Greg Minnis

Publication Date: 8 March 2021

Publication Site: Pew Trusts

How Pandemic-Driven Revenue Shortfalls Could Affect State Pension Contributions

Link: https://www.pewtrusts.org/en/research-and-analysis/articles/2021/01/13/how-pandemic-driven-revenue-shortfalls-could-affect-state-pension-contributions

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As states respond to the Covid-19 pandemic, many also face severe revenue shortfalls because of the economic downturn. These gaps between resources and planned spending pose immediate challenges for policymakers, who must balance budgets while addressing increased demand for public health and other essential services. Some states have already tried to cut costs by reducing or delaying contributions to public pension plans, and others may consider doing so if federal aid to states does not materialize.

The pandemic’s effect on state budgets has been significant. Fiscal year 2020 marked the first time that state general fund revenues declined since the Great Recession, with preliminary projections issued since March showing that states expected fiscal 2021 revenues to fall below initial estimates by about 10%, on average. More recent estimates indicate that state revenue shortfalls could total more than $300 billion cumulatively over fiscal years 2020-22.

Author(s): David Draine & Stephanie Connolly

Publication Date: 13 January 2021

Publication Site: Pew Trusts